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ESPN Poised For Future In ITV, Wireless, Broadband

Buoyed by a well-recognized brand and leadership in cable TV, ESPN is staking its future on its established businesses and branching into other platforms.

The signature channel, which has been on
the air since September 1979, reaches 87 million households, 98% of the country’s cable households. ESPN 2 and ESPN News are building market share, there are 700 affiliates on ESPN’s radio networks
and ESPN’s international channels reach 150 million people in 150 countries. ESPN.com continues its growth, with a record 13 million unique visitors to its site in November. ESPN: The Magazine just
reached 1.6 million circulation.

Add fellow Walt Disney subsidiary ABC Sports – part of its joint sales staff – and you’ve got a good platform for cross-media deals, ESPN President George
Bodenheimer said.

“I realize everybody says that, but if you just step back and think about how we organize ourselves, we can sell everything from a Saturday morning unit in outdoors programming on
ESPN to the Super Bowl. You want to be in that and anything in between or anything on dot-com, the magazine or radio … I’ve got one head of sales, and he can execute across all of those properties,”
Bodenheimer said.

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And many of the deals – as many as 40% of the deals in excess of $1 million -- involve more than just TV, Bodenheimer said.

In his presentation to a media conference last
week, Bodenheimer outlined ESPN’s growth strategy not only in print, online and TV but also in emerging technologies.

In TV, he pointed to a run of success in contracts to run NFL, Major League
Baseball, NHL and NBA games plus coverage of college football and basketball. All of these are locked in to ESPN until at least 2006. He also said the action sports X Games draw a lot to the channels.

“You’ve got a sports lineup second to none,” he said.

After a double-digit decline in ratings last year, ESPN is seeing an increase this year that Bodenheimer said was in part due to the new NBA
contract. Ratings are up 14% in 24 hours and up 16% in primetime. Ad revenues are also increasing, and ESPN is continuing its lead as number-one in local ad sales revenue with at least a half billion
dollars in revenue in 2002 for local cable operators. ESPN also has 45% of all sports GRPs excluding the Olympics; with the addition of the NBA, Bodenheimer said it would increase to 50%.

ESPN
Deportes, the Spanish language service, will expand to a 24/7 network soon and a new digital TV center will be online by late next year at ESPN’s Bristol, Conn., headquarters.

“We’re going to need
to deliver content to take you to the next level of growth and ESPN has the content. … I think it’s going to be a winner,” said Bodenheimer.

ESPN delivering broadband services in contracts with
AT&T and Comcast. “We’re really bullish on broadband,” he said. A recently announced deal with Cablevision in Long Island puts ESPN into interactive TV. The company is dealing with all the big
wireless providers to deliver content from games and fantasy leagues to sports information and ring tones. With its video on demand service, ESPN is mining its library for what can be used as the
“best of” in major markets like Boston and Philadelphia and in custom college packages.

New rights deals are also being made with the new technologies in mind, he said. In the NBA deal, rights were
granted not only for ESPN and ESPN2 but also ESPN Classic, ESPN broadband, radio and video-on-demand.

“We’ve got 40 businesses we want to bring to the feeding trough of any of these major contracts
… We want broad rights and we want to work with rights holders that want to grant us wide rights,” he said. That’s one reason why they walked away from NASCAR, he said.